Considerable controversy surrounded the efforts to appoint him a judge: the initial proposal to appoint him Lord Chancellor of Ireland met with fierce resistance from Irish Nationalists, and great efforts were made to find another vacancy. It appears that Baron Atkinson was asked to retire from the House of Lords but refused.[2] Pressure was then put on the Lord Chief Justice of Ireland, Richard Cherry, who was seriously ill, to step down. Cherry was initially reluctant but eventually agreed to retire in December 1916.[3]Maurice Healy in his memoirs remarks that Campbell was considered the finest Irish barrister of his time, with the possible exception of Edward Carson, but as a judge he was somewhat fretful and impatient.[4]

Campbell was created a baronet in 1917, and the following year was appointed Lord Chancellor of Ireland. During the Irish War of Independence, his position was somewhat ambiguous. As head of the judiciary, he was naturally expected by the British Government to do all in his power to uphold British rule; but as his later career showed he was not opposed to the existence of the Irish Free State and was willing to play a role in the new Government. This attitude naturally infuriated the British administration, some of whom regarded it as a betrayal. Mark Sturgis, the Dublin Castle official whose diaries give a vivid picture of the last years of British rule, condemned Campbell bitterly as a coward who "does nothing and apparently thinks of nothing but the best way to show Sinn Féin that he is neutral and passive."[5] Noted Irish historian R. B. McDowell has commented in relation to this and similar criticism from his successor as Lord Chancellor, Sir John Ross that both men did not intend to stay and live in Southern Ireland, Ross moving to Tyrone, Sturgis safely back to England. The implication is that it's easier to be stridently and publicly anti-IRA if you will not be living in a state being run by them subsequently.
On relinquishing office in 1921 he was ennobled as Baron Glenavy, of Milltown in the County of Dublin.

In 1922 he was nominated to the new Free State Seanad by W. T. Cosgrave, and was elected by almost all of his fellow senators as its first chairman (Cathaoirleach) on 12 December 1922.[6] This was in the midst of the Irish Civil War and shortly after his appointment his family home in Kimmage, Dublin was burnt by the anti-Treaty IRA, as part of their campaign against the representatives of the new state.[7]

After the 1925 Seanad election he was again elected as chairman on 9 December 1925 by a vote of 40–12.[8] He did not seek re-election when his term in the Seanad expired in 1928.[9]

In January 1923 Lord Glenavy chaired the Judicial Committee appointed to advise the Executive Council of the Irish Free State (cabinet) on the creation of a new courts system for the Irish Free State. His recommendations were implemented in the Courts of Justice Act 1924 which largely created the Irish courts system as it currently exists. This replaced, and indeed replicated the existing court system as established by the Government of Ireland Act 1920. The so-called Dail 'courts' were declared to have been illegal however their outstanding 'judgements' were conferred with legal standing by a separate Act of the Oireachtas.

His grandson, under the name Patrick Campbell, was a noted satirist in the early years of television. He was a longtime captain of one of the panels in the BBC gameshow Call My Bluff against British comedy writer Frank Muir. Another grandson, Michael Campbell, later the 4th and last Lord Glenavy was the author of the homosexual novel Lord Dismiss Us.